Thayer Consultancy Background Briefing:

ABN # 65 648 097 123

Trump Lifts Sanctions on North
Korea
Carlyle A. Thayer
March 24, 2019

We are preparing a report about the current state of US/DPRK [Democratic People’s
Republic of Korea] relations in the light of recent developments US sanctions on
Chinese ships, DPRK withdrawing from inter-Korea liaison office, and now Trump's
new tweet that reverses U.S. policy on sanctions. These all seem quite abrupt changes
of events.
We request your assessment on what you make of the current situation – the events
post the breakdown of the Hanoi second summit and the events in recent days?
What should we make of it? What is your reaction?
ANSWER: The confluence of three developments –the U.S. Treasury’s imposition of
sanctions on two Chinese shipping companies for evading UN sanctions on North
Korea, North Korea’s abrupt withdrawal from the liaison office with South Korea, and
President Donald Trump’s tweet rescinding the new sanctions – demonstrate how
Trump’s highly personal transactional foreign policy clashes with bureaucratic routine.
Ever since President Trump took office, he has sought and received cooperation from
President Xi Jin-ping to impose UN Security Council sanctions on North Korea as part
of his goal of ending nuclear threats to the United States. Since the first summit
between Trump and Kim Jong-un, China has continued to support UN sanctions in the
main while permitting a degree of evasion through ship to ship transfers at sea
between local authorities in China and North Korea.
On 21 March, it was reported that Bohai Ferry, a Chinese shipping company, and North
Korea’s Nampo port city, “recently agreed” to open exclusive freight and cruise
transport routes between Nampo and Yantai, and between Nampo and Dalian. The
UN Sanctions Committee identified the Dalian-Nambo route as a smuggling channel
to evade UN sanctions. Nampo also was identified as a base for illegal oil
transshipments.
U.S. Treasury Sanctions
On 21 March (Washington time), the U.S. Treasury announced it was imposing
sanctions on two Chinese shipping companies involved in evading UN Security Council
sanctions prohibiting trade with North Korea in coal, metal and limiting fuel imports.
The Treasury sanctions prohibit American citizens from dealing with the Dalian Haibo
International Freight Co. Ltd. and the Liaoning Danxing International Forwarding Co.
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Ltd. and freeze any assets they may have in the United States. The U.S. Treasury also
identified sixty-seven vessels engaged in illicit transfers of refined petroleum to and
facilitating the export of coal from North Korea.
Secretary of the Treasury Steve Mnuchin stated while announcing the new sanctions,
“The United States and our like-minded partners remain committed to achieving the
final, fully verified denuclearization of North Korea and believe that the full
implementation of North Korea-related U.N. Security Council resolutions is crucial to
a successful outcome… Treasury will continue to enforce our sanctions and we are
making it explicitly clear that shipping companied employing deceptive tactics to mask
illicit trade with North Korea expose themselves to great risk.”
National Security Adviser John Bolton also reiterated the prevailing line that the new
Treasury sanctions were “important actions” and “The maritime industry must do
more to stop North Korea’s illicit shipping practices. Everyone should take notice and
review their own activities to ensure that they are not involved in North Korea’s
sanctions evasion.”
The U.S. Treasury’s action imposing sanctions on two Chinese shipping companies was
a calculated and limited bureaucratic response. It sent a message to China to exert
stronger measures to enforce UN Security Council sanctions. And it also sent a
message to Pyongyang that sanctions would remain in place until North Korea took
what the U.S. viewed as meaningful steps to denuclearise the Korean peninsula.
After the breakdown of the Trump-Kim second summit in Hanoi in late February, on
15 March North Korea signaled through its Vice Minister of Foreign Affairs, Choe Son-
hui, that it questioned the utility of continued negotiations with the United States and
hinted that Chairman Kim would soon make an announcement regarding possible
resumption of missile and nuclear testing.
According to Choe, “We have neither the intention to compromise with the U.S. in any
form nor much less the desire or plan to conduct this kind of negotiation. Whether to
maintain this moratorium or not is the decision of our chairman of the state affairs
commission. He will make his decision in a short period of time.”
North Korea Withdraws from Inter-Korea Liaison Office
Within hours of the U.S. Treasury sanctions North Korea announced (22 March, Seoul
time) it was withdrawing its officials from the joint Kaesong liaison office with South
Korea.
North Korea’s actions, in contrast, were not a bureaucratic response but a calculated
diplomatic action to send at least two messages. First, North Korean sought to drive a
wedge between South Korea and the U.S. on the issue of punitive sanctions. President
Moon Jae-in had invested heavily in North-South reconciliation and he was left
exposed when the second Trump-Kim summit broke down.
On 22-23 March, two North Korean websites, Meari and DPRK Today, unloaded on
President Moon. Meari opined, “The South’s authorities can’t do anything without
approval or instruction from the United States, so how do they think they can be a
mediator or facilitator? They should know their place.”
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DPRK Today accused President Moon of reneging on his promise to improve inter-
Korean relations and giving priority to “cooperation with a foreign force [over]
cooperation among the Korean nation. The South Korean authorities’ behavior is
deplorable. The only things the South will get from cooperating with the U.S. will be a
deepening subordination, humiliation and shame.”
Second, North Korea was also signaling obliquely to the U.S. that North Korea was
prepared to tough it out until the U.S. changed its policy on sanctions.
President Trump Withdraws Additional Sanctions on North Korea
On the same day that the U.S. Treasury announced its sanctions, Trump tweeted from
Mar-a-Lago, “It was announced today by the U.S. Treasury that additional large scale
Sanctions would be added to those already existing Sanctions on North Korea. I have
today ordered the withdrawal of those additional Sanctions.”
Trump’s tweet caused immediate confusion on multiple fronts. First, the Treasury
sanctions on two Chinese shipping companies hardly seemed like “large scale
Sanctions.” Second, there was media speculation based on official sources that Trump
was responding to new large-scale sanctions that were planned but not yet
announced.
Third, was President Trump watering down his Administration’s hardline approach to
sanctions? If so, was it to placate North Korea in order to resume bilateral negotiations
on denuclearization on the Korean peninsula? Where does President Trump’s volte
face leave U.S. allies and other members of the international community that have
supported UN Security Council sanctions? Trump’s tweet undercut Treasury Secretary
Mnuchin and National Security Adviser Bolton who were following bureaucratic
routine. China, it would seem, is free to countenance low-level evasion of sanctions
by ship to ship transfers of oil and coal.
Trump’s Transactional Approach
President Trump’s reversal of Treasury sanctions on the same day that they were
issued appears motivated by his transactional approach to North Korea and his firm
conviction that he has a special relationship with Chairman Kim and together they can
bring peace to the Korean peninsula. North Korea’s Vice Minister of Foreign Affairs
Choe played to this conceit. On 15 March, she told a news conference in Pyongyang
for foreign correspondents and diplomats that personal relations between Kim and
Trump were “still good and the chemistry is mysteriously wonderful.” Choe also
accused Secretary of State Mike Pompeo and National Security Adviser Bolton of
creating “an atmosphere of hostility and mistrust.”
North Korea’s diplomatic gambit is to play to Trump’s transactional approach. In sum,
cut out the middlemen and let the two principals – Chairman Kim and President Trump
– negotiate peace on the Korean peninsula. President Trump’s Press Secretary Sarah
Sanders underscored Trump’s transactional approach when she issued a statement on
this matter that read, “President Trump likes Chairman Kim and he doesn’t think these
sanctions will be necessary.”
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Suggested citation: Carlyle A. Thayer, “Trump Lifts Sanctions on North Korea,” Thayer
Consultancy Background Brief, March 24, 2019. All background briefs are posted on
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